SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
IMPERIAL BANCORP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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Notes:
[LOGO OF IMPERIAL BANCORP]
IMPERIAL BANK BUILDING
P.O. BOX 92991
LOS ANGELES, CALIFORNIA 90009
(310) 417-5600
April 15, 1998
TO OUR SHAREHOLDERS:
We are pleased to invite you to attend the Annual Meeting of Shareholders of
the Company which will be held at our offices in the Imperial Bank Building,
9920 South La Cienega Boulevard, Second Floor, Inglewood, California 90301, on
Thursday, May 21, 1998, at 10:00 a.m.
The matters upon which Shareholders will be asked to act will be to elect
directors, and to ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent accountants. Information about these matters is set
forth in the attached Proxy Statement.
Although you may presently plan to attend the meeting, I urge that you
complete your proxy and date, sign and return the proxy in the enclosed
postage paid envelope. If you attend the meeting, as I hope you will, you may
vote in person even though you have previously mailed the executed proxy card.
/s/ George L. Graziadio, Jr.
George L. Graziadio, Jr.
Chairman of the Board, President and
Chief Executive Officer
[LOGO OF IMPERIAL BANCORP]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1998
The Annual Meeting of Shareholders of Imperial Bancorp will be held at the
Company's offices in the Imperial Bank Building, 9920 South La Cienega
Boulevard, Second Floor, Inglewood, California 90301, on May 21, 1998, at
10:00 a.m., to consider and vote upon the following proposals:
1. The election of seven directors.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants for 1998.
3. Any other business that may properly come before the meeting.
The foregoing matters are more fully described in the accompanying Proxy
Statement.
Shareholders of record at the close of business on March 6, 1998, will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard M. Baker
Richard M. Baker
Secretary
[LOGO OF IMPERIAL BANCORP]
PROXY STATEMENT
VOTING AND PROXY
The enclosed proxy is being solicited by the Board of Directors of Imperial
Bancorp, a California corporation, and will be voted at the Annual Meeting of
Shareholders on May 21, 1998, unless revoked prior to the voting thereof.
The solicitation of proxies will be by mail and the cost will be borne
directly by the Company. Additionally, officers and other Company employees
may solicit proxies by telephone, telegram or personally. Upon request, the
Company will reimburse banks, brokers, nominees and related fiduciaries for
reasonable expenses incurred by them in sending annual reports and proxy
materials to beneficial owners of the Company's stock.
All shares represented by each properly executed unrevoked proxy received in
time for the meeting will be voted. Any proxy given may be revoked any time
prior to its exercise by filing with the Secretary of the Company a writing
revoking it or a duly executed proxy bearing a later date, or by attending and
voting in person. The Proxy Statement and the accompanying Form of Proxy will
be first mailed to the Company's Shareholders on or about April 15, 1998.
VOTING SECURITIES
Shareholders of record on March 6, 1998, are entitled to notice of, and to
vote at, the 1998 Annual Meeting of Shareholders or any adjournment or
adjournments thereof. As of March 1, 1998, there were 39,359,370 outstanding
shares of common stock. Each Shareholder is entitled to one vote for each
share held on all matters to come before the meeting.
The candidates receiving the highest number of votes, up to the number of
directors to be elected, shall be elected.
NOMINATIONS FOR DIRECTORS
Article III, Section 3(b) of the Company's By-Laws sets forth the following
special procedures for nominations of directors by persons other than the
Board of Directors:
"Nominations for the election of directors may be made by the Board of
Directors or by any Shareholder entitled to vote for the election of
directors. Such nominations other than by the Board of Directors shall be
made by notice in writing, delivered or mailed by first class United States
mail, postage prepaid, to the Secretary of the corporation not less than 60
days prior to the first anniversary of the date of the last meeting of
Shareholders of the corporation called for the election of directors.
(1) Each notice shall set forth (i) the name, age, business address
and, if known, residence address of each nominee proposed in such
notice; (ii) the principal occupation or employment of each such
nominee; (iii) the number of shares of stock of the corporation which
are beneficially owned by such nominee; and (iv) such other information
as would be required by the Federal Securities Law and the Rules and
Regulations promulgated thereunder in respect to an individual
nominated as a director of the corporation and for whom proxies are
solicited by the Board of Directors of the corporation.
(2) The Chairman of any meeting of Shareholders may, if the facts
warrant, determine and declare to the meeting that a nomination was not
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded."
To comply with the above By-Law provision, nominations for the 1998 Annual
Shareholders Meeting by persons other than the Board of Directors should have
been received on or before March 17, 1998. The Company did not receive any
such nominations and considers such nominations to be closed.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information as of March 1, 1998, pertaining to the
securities ownership by persons known to the Company to own 5% or more of any
class of the Company's voting securities, current directors of the Company and
Named Executive Officers. The information contained herein has been obtained
from the Company's records, from various filings made by the named individuals
with the Securities and Exchange Commission or from information furnished
directly by the individuals or entity to the Company.
The Company is of the opinion that there is no person who possesses directly
or indirectly the power to direct or cause direction of the management and
policies of the Company, nor is it aware of the existence of a group of
persons formed for such purpose, whether through the ownership of voting
securities, by contract or otherwise.
The table should be read with the understanding that more than one person
may be the beneficial owner or possess certain attributes of beneficial
ownership with respect to the same securities. Thus, careful attention should
be given to the code designations and footnote references set forth in the
column "Nature of Holdings." In addition, options with respect to shares
exercisable or shares issuable within 60 days of the date of this information
are deemed to be outstanding and have been utilized in calculating the
percentage ownership of those individuals possessing such interest. Thus, the
total number of shares considered to be outstanding for the purposes of this
table may vary depending upon the stockholder's particular circumstance.
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES NATURE OF PERCENT OF
AND POSITION HELD FOR WHICH INCLUSION REQUIRED HELD HOLDINGS COMMON
---------------------------------------------- --------- --------- ----------
1. George L. Graziadio, Jr.--Chairman of the
Board, President & CEO
--Direct Ownership 244,270 AC(1)(2)
--Graziadio Investment Company 3,305,760 AC(2)(3)
--Exercisable under 1986 Stock Option Plan 675,847 AC(2)
--Employee Stock Ownership Plan 224 A(2)
--Profit Sharing Plan 182 AC(2)
---------
4,226,283 10.73%
2. Norman P. Creighton--Director
--Direct Ownership 452,449 AC(1)
--Exercisable under 1986 Stock Option Plan 525,847 AC
--Employee Stock Ownership Plan 3,870 A
--401K Plan 46,772 AC
--Profit Sharing Plan 78,039 AC
---------
1,106,977 2.81%
3. Imperial Trust Company, Trustee for
--Imperial Bancorp Profit Sharing Plan 1,254,231
--Imperial Bancorp Employee Stock Owner-
ship Plan 572,498
--Imperial Bancorp 401K Plan 757,064
---------
2,583,793 6.56%
2
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES NATURE OF PERCENT OF
AND POSITION HELD FOR WHICH INCLUSION REQUIRED HELD HOLDINGS COMMON
---------------------------------------------- ------- --------- ----------
4. Bernard G. LeBeau--Director
--Direct Ownership 22,284 AC(2) 0.05%
5. G. Louis Graziadio, III--Director
--Direct Ownership 124,414 AC(2)
--Custodian for Children 103,640 BDE(4)
--Trustee Gina and Carra Partnership 105,915 BDE(4)
--George & Reva Graziadio
Grandchildren's Trust 34 BDE(4)
--Exercisable under 1986 Stock Option Plan 31,230 AC(2)
--Graziadio Investment Company, 3,305,760
shares 134,151 E(3)(5)
-------
499,384 1.26%
6. Richard K. Eamer--Director
--Direct Ownership 24,751 AC(2)
--Exercisable under 1986 Stock Option Plan 14,730 AC(2) 0.10%
-------
39,481
7. Lee E. Mikles--Director
--Exercisable under 1986 Stock Option Plan 59,250 AC(1)(2) 0.15%
8. Paul A. Novelly--Director
--Direct Ownership 9,157 AC(2)
--Exercisable under 1986 Stock Option Plan 66,000 AC(2)
--Paul A. Novelly Charitable Remainder Trust 105,000 ACE(6)
--Apex Oil Employees Savings Plan 105,240 CD(6)
--Novelly Exempt Trust 60,001 E(6)
--West Bank Trust 455,910 E(6)
-------
801,308 2.03%
9. Daniel R. Mathis--President of Imperial Bank
--Direct Ownership 28 AC(2)
--Exercisable under 1986 Stock Option Plan 85,782 AC(2)
--Employee Stock Ownership Plan 2,587 A(2)
--401K Plan 1,117 AC(2)
--Profit Sharing Plan 582 AC(2)
-------
90,096 0.22%
10. Eldon K. Lloyd--Exec. VP of Imperial Bank
--Exercisable under 1986 Stock Option Plan 21,658 AC(2)
--Employee Stock Ownership Plan 3,856 A(2)
--401K Plan 22 AC(2)
-------
25,536 0.06%
11. Richard J. Casey--Exec. VP of Imperial Bank
--Direct Ownership 126,553 AC(2)
--Exercisable under 1986 Stock Option Plan 44,927 AC(2)
--Employee Stock Ownership Plan 2,776 A(2)
--401K Plan 6,681 AC(2)
--Profit Sharing Plan 1,106 AC(2)
-------
182,043 0.46%
3
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES NATURE OF PERCENT OF
AND POSITION HELD FOR WHICH INCLUSION REQUIRED HELD HOLDINGS COMMON
---------------------------------------------- --------- --------- ----------
12. All Current Officers and Directors as a
Group of 18 7,179,767 (7) 18.24%
13. Graziadio Family Trust
(Phillip M. Bardack, Stevan Calvillo,
William R. Lang, Trustees)
--Beneficial Owner of More Than
Five Percent 2,015,009 BD 5.11%
Notes:
The address for all persons above is:
Imperial Bank Building
9920 South La Cienega Boulevard
Inglewood, CA 90301
A--Possess Sole Voting Power
B--Possess Shared Voting Power
C--Possess Sole Investment Power
D--Possess Shared Investment Power
E--Disclaim Beneficial Ownership
- --------
(1) George L. Graziadio, Jr., Norman P. Creighton and Lee E. Mikles serve as
members of the Imperial Bancorp Salary Investment, Profit Sharing and
Employee Stock Ownership Plans Administrative Committee (the "Committee")
which is a committee of the Board of Directors of the Company. The
Committee has the power, pursuant to the Imperial Bancorp Salary
Investment, Profit Sharing and Employee Stock Ownership Plans, to direct
the Plan Trustee as to the manner in which it shall vote the shares of
common stock held by the Trustee, other than allocated shares held in the
Employee Stock Ownership Plan. The Committee acts by a majority vote. The
Board also has the right to act as a committee of the entirety. The shares
held by the Trustee are not included in the number of shares shown to be
beneficially held by each of Messrs. George L. Graziadio, Jr., Norman P.
Creighton and Lee E. Mikles as each of them disclaims direct beneficial
ownership of the shares so held.
(2) Pursuant to California law, personal property held in the name of a
married person may be community property as to which either spouse has the
power and ability to manage and control in its entirety. The Company has
no information pertaining to whether these shares are or are not community
property or whether any arrangement exists between the spouses pertaining
to voting or disposing of these shares and has thus assumed that, in the
absence of information to the contrary, married persons share investment
and voting power with their spouse.
(3) Holdings attributable to multiple parties have been adjusted to avoid
duplications.
(4) G. Louis Graziadio, III holds 103,640 shares as custodian/trustee for his
children, which are reported in his total. Mr. Graziadio disclaims
beneficial ownership of the shares so reported.
(5) The Graziadio Investment Co. ("GIC") is a limited partnership of which the
Graziadio Investment Corp. ("GI Corp.") is the General Partner. George L.
Graziadio is the controlling shareholder of GI Corp. and a Class A Limited
Partner of GIC. The limited partners include the George L. & Reva M.
Graziadio Grandchildren's Trust No. 1 (Trust No. 1) and George & Reva
Graziadio Trust (Trust). G. Louis Graziadio, III is a trustee of Trust No.
1 and trustee and beneficiary of the Trust and disclaims beneficial
ownership except as to his beneficial interest, 4.0581% of GIC.
(6) Mr. Novelly is the settlor and trustee of the Paul A. Novelly Charitable
Remainder Trust and has sole voting and investment power, but disclaims
any beneficial ownership of its shares. He shares voting and investment
power of the shares held by the Apex Oil Employees Savings Plan, but
disclaims beneficial ownership. Mr. Novelly is the settlor and beneficiary
of the Novelly Exempt Trust, but not a trustee, and has no voting or
investment power and disclaims any beneficial ownership. Mr. Novelly is
the settlor and a beneficiary of the West Bank Trust, but not a trustee,
and, thus, has no voting or investment power and he disclaims beneficial
ownership of the West Bank Trust's shares.
(7) There are 1,698,789 shares representing outstanding options exercisable by
current officers and directors within 60 days of this table.
4
PROPOSAL 1. ELECTION OF DIRECTORS
Directors are elected at each Annual Meeting of Shareholders and hold office
until their respective successors are elected. The By-Laws of the Company
provide that the number of directors may be no less than five (5) and no more
than ten (10) with the number being fixed by a resolution of the Board of
Directors which has set the number as seven (7). All the nominees other than
Mr. Novelly were elected to the Board at the last Shareholders Meeting. All
the nominees are believed to be willing to serve as directors, but if any of
them should decline or be unable to act as a director, the proxy holders will
vote for the person designated by the Board of Directors to replace any such
nominee.
Set forth below is certain information as of March 1, 1998, with respect to
each of the nominees.
DIRECTOR PRINCIPAL OCCUPATION AND
NAME AGE SINCE OTHER DIRECTORSHIPS HELD
---- --- -------- ------------------------
George L. Graziadio, Jr. 78 1969 Chairman of the Board, President and Chief
Executive Officer of the Company; Director of
the Company; Chairman of the Board of Imperial
Bank; Director of various other subsidiaries.
Mr. Graziadio is engaged as an owner or partner
in many other business activities, primarily in
the real estate industry. Director of Coastcast
Corp. Mr. Graziadio is the father of G. Louis
Graziadio, III, and uncle of Lee E. Mikles,
nominees for election to the Board of Directors.
Bernard G. LeBeau 76 1982 Director of the Company; Director of Imperial
Bank. Chairman of the Board of Imperial Bank
1982 to 1995. Financial consultant from 1979 to
1982. Executive Vice President and Chief
Operating Officer of the Bank from 1974 to 1979.
Norman P. Creighton 62 1985 Director of the Company; Vice Chairman of the
Board, Chief Executive Officer and Director of
Imperial Bank.
Richard K. Eamer 69 1985 Director of the Company; Director of Imperial
Bank. Retired CEO, National Medical Enterprises,
Inc.
G. Louis Graziadio, III 48 1984 Director of the Company and Imperial Trust Co.;
Director of Imperial Credit Industries, Inc.
President of Ginarra Holdings, Inc., and
subsidiaries, a California corporation engaged
in investments. Director of Vista 2000, Inc.;
Director of Franchise Mortgage Acceptance Co. He
is the son of George L. Graziadio, Jr., Chairman
of the Board.
Lee E. Mikles 42 1996 Director of the Company; Director of Imperial
Bank. Investment advisor, Mikles/Miller
Management Inc. Director of Coastcast Corp.;
Director of Vista 2000, Inc. He is the nephew of
George L. Graziadio, Jr., Chairman of the Board.
Paul A. Novelly 54 1998 Director of the Company, Director of Imperial
Bank. President of Apex Oil Co., Inc. Director
of Coastcast Corp; Director of Vista 2000, Inc.;
Director of Intrawest Corp.
5
Mr. Novelly has been a director of Imperial Bank since 1996. He was
appointed to the Board of the Company effective March 17, 1998.
The Company does not currently have a nominating committee of the Board of
Directors. Generally, the Board of Directors as a whole acts upon such matters
as nominations. The Compensation Committee is composed of Messrs. Eamer and
LeBeau. The Company has an Executive Committee which is composed of Messrs.
Graziadio, Creighton, Muehlenbeck, Lloyd, Mathis, Casey, Chenoweth, Daley and
Ms. McCarthy. The Committee meets monthly, primarily to consider and act upon
various aspects of the Company's ongoing operations. The Committee may,
however, consider such matters as compensation and audit and make
recommendations on these or other matters to the Board of Directors in its
entirety. From time to time, the Board of Directors has and will refer matters
to the Executive Committee for implementation in line with policies
established by the Board of Directors. The Executive Committee met 12 times
during 1997.
Messrs. Eamer and LeBeau serve on the Audit Committee, which meets
quarterly, or more as needed.
The Company's Board of Directors held 12 regularly scheduled meetings during
1997. No incumbent director, other than Mr. Eamer, attended fewer than 75% of
the aggregate of (a) the total number of meetings of the Board of Directors
and (b) the total number of meetings of committees of the Board of which he
served (during the period for which he served).
Director Fees
The directors who are not salaried employees of the Company or its
subsidiaries receive an annual retainer of $12,000, payable quarterly, $1,000
per Board meeting attended and $500 for each committee meeting attended. In
addition, members of the Audit Committee receive an additional $3,000
retainer, payable quarterly, and $500 per meeting attended. Directors may
defer all or a portion of their fees under the Deferred Compensation Plan.
Salaried employees receive no additional compensation for their services as
directors.
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended December 31, 1997,
1996 and 1995, the compensation for services in all capacities to the Company
of those persons who were at December 31, 1997, the chief executive officer
and the other four most highly compensated executive officers of the Company
(the "Named Executive Officers").
6
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
OTHER RESTRICTED NUMBER ALL
NAME AND ANNUAL STOCK OF OPTION LTIP OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMP(2) AWARDS SHARES(3) PAYOUTS COMP(4)
------------------ ---- --------- -------- -------- ---------- --------- ------- -------
George L. Graziadio, Jr. 1997 $435,000 $767,442 $270,614 0 0 $00 $13,012
Chairman of the Board 1996 375,000 482,812 352,568 0 381,150 0 12,218
and Chief Executive Officer, 1995 330,000 350,000 105,390 0 0 0 9,728
Imperial Bancorp
Norman P. Creighton 1997 $435,000 $700,900 $217,167 0 0 $ 0 $17,762
Vice Chairman of the 1996 375,000 482,812 177,874 0 381,150 0 16,968
Board and Chief Executive 1995 330,000 350,000 85,043 0 0 0 12,725
Officer, Imperial Bank
Daniel R. Mathis 1997 $275,000 $443,100 $ 69,117 0 0 $ 0 $13,012
President, 1996 160,000 167,800 39,070 0 229,843 0 12,401
Imperial Bank 1995 121,999 64,437 18,147 0 0 0 11,355
Eldon K. Lloyd 1997 $220,000 $273,200 $108,104 0 0 $ 0 $13,012
Executive Vice President, 1996 220,000 230,450 109,896 0 39,105 0 12,478
Imperial Bank 1995 195,000 200,000 52,685 0 0 0 9,728
Richard J. Casey 1997 $200,000 $243,500 $97,148 0 0 $ 0 $16,380
Executive Vice President, 1996 175,000 178,467 76,234 0 51,478 0 15,303
Imperial Bank 1995 149,950 100,000 27,670 0 0 0 12,725
- --------
(1) Compensation deferred at election of executive included in category and
year earned.
(2) Includes automobile allowance, additional life, GTL, tax services,
employer contribution to deferred compensation and below market interest
on loans.
(3) Adjusted to reflect 8% stock dividend in February 1996, 3 for 2 stock
split in October 1996, 10% stock dividend in February 1997, and 3 for 2
stock split in February 1998.
(4) These amounts represent contributions to the Company's Profit Sharing
Plan, 401K Plan and Employee Stock Ownership Plan.
Special Compensation Agreements
In order to encourage certain executive officers to remain with the Company
and to continue to devote full attention to the Company's business in the
event an effort is made to obtain control of the Company, the Company has
entered into Special Compensation Agreements with Messrs. G. L. Graziadio, Jr.
and N. P. Creighton. These agreements provide for certain payments in the
event of a change of control equal to the lesser of 2.9 times the average
annual compensation of the executive officer or the largest gross special
compensation amount which, in the opinion of the Company's independent
auditors, will maximize the net payment to the executive after consideration
of the executive's income taxes and the excise tax imposed by the Internal
Revenue Code and applicable State excise tax provision. Special compensation
is payable to Mr. Graziadio upon a change in control and to Mr. Creighton upon
a termination after a change of control unless such termination is the result
of his death, disability, retirement or good reason as defined in the
agreement.
SUPPLEMENTAL COMPENSATION PLANS
The Chairman of the Company is covered by a Death Benefit Only Plan ("DBO
Plan") which, pursuant to a compensation agreement executed between the
Company and Mr. Graziadio, provides for a death benefit beginning at
$2,546,000.00 in year one and increasing annually to $5,085,461.00 at the end
of year 15. The Company has purchased a life insurance policy to fund the
death benefits under the DBO Plan.
In 1996, the Company established a Split Dollar Life Insurance Plan to
provide certain death benefits to the estate of the Company's Chairman and his
spouse. The insurance policy purchased under the Plan provides for a lump sum
payment to the estate of the last to survive in amounts ranging from
$10.5 million in year one to $5.2 million in year 26, depending on the time of
death. The Company is obligated to make annual premium
7
payments of $830,000 with respect to the policy for a twelve year period. At
the end of the 13th year, the Company will receive back an amount equal to the
aggregate premiums paid without interest or earnings. The cash surrender value
of the policy offsets the amount of premiums paid. The net income from the
policy for the year ended December 31, 1997, approximated $98,775.
In March 1992, the Board of Directors approved the 1992 Deferred
Compensation Plan for certain senior executives, including the Chairman and
other officers and directors of the Company and its subsidiaries, under which
eligible executives can elect to have credited to their account a portion of
covered compensation for a period of up to seven years, which compensation is
matched by the participant's employer on a basis tied to the Company's return
on equity, from 10% to 50%, with the amounts both deferred and contributed
earning interest at a rate determined annually by the Company based, beginning
September 1, 1997, on the 10-year Treasury Bond yield plus 250 basis points as
determined by the Plan Committee. The participant's participation is limited
to 20% of covered compensation with a maximum amount set for each participant.
In addition, each participant is to receive a grant of nonstatutory stock
options based on his or her contributions and level within the organization
calculated to equal a portion of the amount deferred through the seven years
which, when exercised, will produce a compensation deduction for income tax
purposes for the employer which will offset the compensation cost of the 1992
Plan over its life, assuming appreciation in the Company's book value and the
market value of its stock. The anticipated liabilities of the Company and its
subsidiaries under the 1992 Plan are being accrued.
In January 1996, the Board of Directors approved the 1996 Deferred
Compensation Plan for certain senior executives, including the Chairman and
other officers and directors of the Company and its subsidiaries. Under the
1996 Plan, eligible executives can elect to have credited to their account
annually a portion of covered compensation which is matched by the
participant's employer. The first $9,500 is matched at 50% to encourage senior
executives to not participate in the Qualified 401K Plan, thereby reducing the
top heavy restrictions on that Plan and allowing mid-management employees
greater participation in the Qualified 401K Plan, and the balance on a basis
related to the Company's return on equity, from 10% to 50%, with such amounts
earning interest at a rate set annually based, beginning September 1, 1997, on
the 10-year Treasury Bond yield plus 250 basis points as determined by the
Plan Committee. The bonus for 1995, paid in 1996, for eligible executives
could be included in the 1996 Plan. Each employee participant is limited to
20% of covered compensation and each director to 100%. The Plan allows
participants to effectively roll over amounts distributable under the 1992
Plan into the 1996 Plan in 1999. The anticipated liabilities of the Company
and its subsidiaries under the 1996 Plan are being accrued for financial
statement purposes. To offset the Deferred Compensation Plan liability, the
Company purchased life insurance policies during 1996 for which it is the
beneficiary. The policies have a cash surrender value which substantially
offsets the premiums paid for the policies. The net expense of the policies
approximated $65,997 for the year ended December 31, 1997.
STOCK OPTION PLAN
The 1986 Stock Option Plan was approved by the Shareholders at the 1987
Annual Meeting and amended at the 1990, 1992, 1993, 1995, 1996 and 1997 Annual
Meetings. The 1986 Plan provides for stock options covering 4,339,258 shares
of the Company's common stock, as adjusted for stock dividends, which may be
or have been granted to key executive and supervisory personnel of the Company
and its subsidiaries. Through March 1, 1998, options for 3,724,341 shares had
been granted and are outstanding.
All option prices were equal to the market value of the common stock on the
date of grant and the grants were for the term of either five or ten years as
provided in the Plan, with all options exercisable one-fourth or one-sixth
each year after the first year following the date of grant other than options
granted to directors, which are immediately vested.
8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/97 AT 12/31/97
SHARES VALUE ------------------------ --------------------------
NAME ACQUIRED REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- ---------- ------------------------- --------------------------
George L.
Graziadio,
Jr.(1) 216,598 $3,609,966 675,847 0 $17,930,973 $ 0
Norman P.
Creighton(2) 366,598 $7,082,582 525,847 0 $13,483,269 $ 0
Daniel R.
Mathis(3) 32,043 $ 541,935 69,571 179,401 $ 1,535,418 $3,801,866
Eldon K.
Lloyd(4) 77,355 $1,454,500 9,775 44,801 $ 237,926 $1,172,511
Richard J.
Casey(5) 0 $ 0 69,272 49,753 $ 1,937,576 $1,250,419
- --------
(1) George L. Graziadio, Jr. has 675,847 shares in unexercised director's
options valued at $17,930,973 as of 12/31/97. Director's options are
immediately exercisable in whole or in part and expire five years from
date of grant.
(2) Norman P. Creighton has 525,847 shares in unexercised director's options.
Director's options are immediately exercisable in whole or in part and
expire five years from date of grant. The total value of all unexercised,
in-the-money options was $13,483,269 as of 12/31/97.
(3) Daniel R. Mathis has 212,746 unexercised nonqualified options and 36,226
unexercised incentive options. The total value of all unexercised in-the-
money options was $5,337,284 as of 12/31/97.
(4) Eldon K. Lloyd has 42,201 unexercised nonqualified options and 12,375
unexercised incentive options. The total value of all unexercised, in-the-
money options was $1,410,437 as of 12/31/97.
(5) Richard J. Casey has 53,984 unexercised nonqualified options and 65,041
unexercised incentive options. The total value of all unexercised, in-the-
money options was $3,187,995 as of 12/31/97.
9
REPORT OF THE COMPENSATION COMMITTEE
The compensation policies of Imperial Bancorp (the "Company") are structured
to link the compensation of the Chief Executive Officer and other executives
of the Company with corporate performance. Through the establishment of short
and long term compensation programs, the Company has aligned the financial
interests of the executives with the results of the Company's performance,
which are designed to put the Company in a competitive position regarding
executive compensation and also to ensure corporate performance, which will
enhance shareholder value. The Company participates in surveys of comparable
compensation practices for financial institutions which are available to the
Committee. The Committee considers the studies and surveys in determining base
salary, bonus and long term stock based compensation. The Committee discusses
and considers executive compensation matters and makes its decisions, subject
to review by the Board.
The Company's executive compensation philosophy is to set base salary at a
conservative market rate and then to provide performance based variable
compensation which allows total cash compensation to fluctuate according to
the Company's earnings as well as value received by shareholders.
The Company's deferred compensation plans allow it to defer any compensation
in excess of amounts that would be deductible under applicable tax laws to
assure no disallowance of compensation under "excess compensation" rules.
In line with the overall compensation program and the objectives set by the
Board annually, the Company's executive officers have a high percentage of
their total compensation at risk, dependent upon the Company's financial
performance.
The increase in the base salary and bonus for Mr. Graziadio, Chairman and
Chief Executive Officer, reflects the Company's results in 1997 which saw core
net income, which excludes noncore income from Imperial Credit Industries,
Inc., gains on the sales of Imperial Credit Industries, Inc. stock, gain on
the sale of a merchant card company, discontinued operations and donations to
nonprofit organizations, increasing 35.7% to $45.7 million for the year.
Diluted earnings per share, based on core net income, increased to $1.12 in
1997 from $.86 in 1996. From its core operations, the Company's return on
average total assets increased to 1.25% for 1997, from 1.21% in 1996. Core
return on average shareholders' equity increased to 14.53% for 1997, from
12.97% in 1996. The increases in core earnings for 1997 were primarily due to
growth in loans and improved net interest margin and continued growth in fee
based services. Average loan balances for 1997 increased approximately 31%
over 1996. Total assets increased 41% to $4.7 billion at December 31, 1997,
with total loans increasing 35% and total deposits increasing 42% over the
prior year-end. Nonaccrual loans decreased to $10.6 million or only 0.38% of
total loans at year-end, down from $20.4 million or 0.99 % at the prior year-
end. Net loan chargeoffs for the year were $7.8 million or 0.33% of average
loans, compared to $8.2 million or 0.45% of average loans for the prior year.
Mr. Graziadio's salary increased $60,000 or 16%, and his bonus increased
$284,630 or 59%, maintaining his salary at a conservative level and
concentrating his compensation on the bonus reflecting the Company's financial
performance. Also, as clearly displayed on the Stock Performance Chart, the
Company's stock substantially outperformed the S&P 500 index, as well as the
index of Southern California Banks, reaching all time highs throughout the
year to the benefit of all the Company shareholders. The compensation of the
other named executives was also increased during the year corresponding to the
Company's financial performance, as well as that of the Company's common
stock.
The Committee notes with sadness the passing of its late member,
Dr. M. Norvel Young, who participated in the determination of 1997
compensation prior to his death, and notes the addition of Mr. LeBeau, who
joined the Committee after the 1997 determinations were made. The Committee
believes that the Company's overall executive compensation program reflects
the success of the Company and has achieved its goal of providing competitive
compensation in order to attract and retain highly qualified executives and to
achieve continued increased performance from management which has and will
continue to enhance shareholder value.
COMPENSATION COMMITTEE
Richard K. Eamer
Bernard G. LeBeau
10
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on Imperial's common stock against the
cumulative total return of the S&P 500 Stock Index and Montgomery Securities'
Western Bank Monitor for Southern California ("Southern California Banks") for
the period of five fiscal years commencing January 1, 1992, and ended December
31, 1997.
[IMPERIAL BANCORP TOTAL RETURN PERFORMANCE GRAPH APPEARS HERE]
PERIOD ENDING
-----------------------------------------------------
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
----- -------- -------- -------- -------- -------- --------
Imperial Bancorp 100.00 146.47 146.51 298.55 473.79 1,070.86
S&P 500 100.00 110.08 111.53 153.44 188.52 251.44
Southern California Banks 100.00 122.27 139.49 176.91 267.07 510.65
Data points for the years 1992-1995 of the Southern California Banks were
provided by Montgomery Securities. Data points for the years 1996-1997 of the
Southern California Banks were provided by SNL Securities, L.P.
Compliance with Section 16(a) of the Securities Act of 1934
Section 16(a) of the Securities Act of 1934 requires the Company's directors
and executive officers, and persons who own more than 10% of a registered class
of the Company's securities, to file with the Securities
11
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than 10% shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the fiscal year ended December 31,
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except
for a late filing by Eldon K. Lloyd, one Form 4.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A loan was made pursuant to the Employee Loan Program under the By-Law
approved by the Shareholders at their 1984 Annual Meeting which is outstanding
to Norman P. Creighton, of $450,000. The loan is unsecured and was made for
the purpose of purchasing outstanding shares of the Company's stock. The loan
is due on demand or the earlier of the termination of his employment or seven
years from August 16, 1993, with principal payments of one seventh of the
principal due annually commencing August 16, 1994, and bears interest at the
rate set each year equal to 60 percent of the average of the one year and
three year Treasury securities at the end of the prior calendar year. For
1998, the rate will be 3.4%.
There is a loan to George L. Graziadio, Jr., Chairman and President of the
Company, in the current amount of $2,957,917.56, which was originally to be
used to repay prior loans from the Company. The loan matures at the earlier of
his termination or January 1, 2002, is secured by his interest in the DBO Plan
and bears interest at the rate specified above. An additional loan in the
original amount of $1,500,000 was granted to Mr. Graziadio in 1990, with a
current balance of $310,714.28, which is due on demand or in seven years from
August 16, 1993, with one-seventh of the principal balance due annually
commencing August 16, 1994, and which bears interest at the rate specified
above. This loan was approved and modified by the Company's Board pursuant to
the By-Law adopted by the Shareholders at the 1984 Annual Meeting.
Under applicable state and federal law and regulations, the amount by which
the interest rate applicable on the loans is less than the market rate is
treated as compensation and subject to taxation. A discount on all these
employee loans is being accreted to interest income over the same period as
the related deferred compensation is being amortized to expense.
E&G Development Company, an affiliate of Mr. G. L. Graziadio, Jr., subleases
certain space from Imperial Bank Realty Company, Inc. ("Realty"), a wholly
owned subsidiary of the Company, for a term continuing through October 31,
1998, at the current monthly rental of $583.49. The terms and conditions of
this transaction were considered competitive with similar rentals in the area
at the time it was entered into.
Consulting agreements were entered into between the Bank and Robert S.
Muehlenbeck, then a Director of the Bank, and Second Southern Corp., a
corporation controlled by G. Louis Graziadio, III, as of November 1, 1991,
pursuant to which Second Southern Corp. and Mr. Muehlenbeck, as Consultants,
agreed to provide services to the Bank in the identification and
implementation of an opportunity to raise capital in connection with the
Bank's mortgage banking and thrift and loan activities. As a result of these
activities by the Consultants, Imperial Credit Industries, Inc. ("ICI") was
formed by the Bank, a registration statement filed with the Securities and
Exchange Commission and the sale of shares of ICI's common stock to the public
was completed for 2,290,000 shares. Under the terms of the consulting
agreements, Second Southern Corp. received reimbursement for its expenses in
providing the services on the basis of $12,500 per month, plus out-of-pocket
expenses and, in addition, Mr. Muehlenbeck and Second Southern Corp. received
fees of $125,000 and $175,000 respectively upon consummation of the public
offering. A second offering of 2,500,000 shares of ICI common stock closed on
May 19, 1993, at $12 per share and Second Southern Corp. and Mr. Muehlenbeck
each received $549,685.65. On April 24, 1996, a third offering of 1,500,000
shares of ICI common stock was made at $26 per share and
12
Second Southern Corp. and Mr. Muehlenbeck each received $853,269.00. In 1997,
Mr. Muehlenback entered into an amendment to the consulting agreement with the
Company pursuant to which he received $5,044,083 in two payments, August and
October, and the Company's obligations to him for future compensation under
the consulting agreement were terminated. Second Southern Corp. will receive
an incentive fee of 2 1/2% of the realized pretax gains received by the Bank
when, as and if realized from the disposition of the remaining ICI securities
held by the Bank, with the Bank having considered to have sold an amount equal
to 20% of any such security as of January 1 of each year from 1997 through
2001, at a price equal to the arithmetic average of the daily average stock
price of ICI common stock as reported by NASD during the preceding year, if
such sale by the Bank has not, in fact, occurred.
LOANS BY THE BANK TO EXECUTIVE OFFICERS AND DIRECTORS
All extensions of credit by the Bank to executive officers and directors of
the Company and the Bank, if any, are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. Such
loans will generally be subject to the provisions of Federal and California
law which will require them to be on terms comparable to those of transactions
with similarly situated nonaffiliated persons.
PROPOSAL 2. RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected and appointed KPMG Peat Marwick LLP
independent certified public accountants, to examine the financial statements
of the Company and its consolidated subsidiaries for the year ending December
31, 1998. In recognition of the important role of the independent accountants,
the Board of Directors has determined that its selection of such accountants
should be submitted to the Shareholders for review and ratification on an
annual basis.
KPMG Peat Marwick LLP has examined the financial statements of the Company
and its consolidated subsidiaries since 1973. The appointment of KPMG Peat
Marwick LLP as the Company's independent accountants for 1997 was ratified at
the 1997 Annual Meeting of Shareholders.
KPMG Peat Marwick LLP is knowledgeable of the Company's operations and
accounting practices and is well qualified to act in the capacity of
independent accountants. In addition to audit services relating to the
Company's consolidated financial statements and various governmental reporting
requirements, KPMG Peat Marwick LLP performs some nonaudit services for the
Company. Fees applicable to the audit of the Company's consolidated financial
statements are reviewed and approved by the Audit Committee before the
services are provided. Other services are not normally approved by the Audit
Committee or the Company's Board of Directors before the services are
provided, but are subsequently reviewed by the Audit Committee. Management
believes that the nonaudit services provided by KPMG Peat Marwick LLP have no
effect on the independence of that firm.
The affirmative vote of a majority of the shares voting on this proposal is
required for its adoption. In view of the difficulty and the expense involved
in changing independent accountants on short notice, if the proposal is not
approved, it is contemplated that the appointment for 1998 may be permitted to
stand, unless the Board of Directors finds other compelling reasons for making
a change. Disapproval of the proposal will be considered as advice to the
Board to select other independent accountants for the following year.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Shareholders Meeting and will be provided the opportunity to make a statement
and to respond to appropriate questions of Shareholders.
ALL PROXIES HELD BY PROXY HOLDERS OF THE COMPANY WILL BE VOTED IN FAVOR OF
THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY AND ITS SUBSIDIARIES FOR 1998 AND THE BOARD OF
DIRECTORS URGES YOU TO VOTE FOR THIS PROPOSAL.
13
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect to such matters in
accordance with their judgement.
PROPOSALS FOR THE 1999 ANNUAL MEETING
Shareholders' proposals submitted for inclusion in the Proxy Statement for
the 1999 Annual Meeting must be received at the Company's Executive Offices no
later than December 12, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard M. Baker
Richard M. Baker
Secretary
Date: April 15, 1998
14
IMPERIAL BANCORP
1998 Meeting
------------
DIRECTION CARD
Imperial Bancorp Employee Stock Ownership Plan
TO: American Stock Transfer and Trust Company
You are hereby directed to report to Imperial Trust Company, Trustee, to vote
with respect to the proposals listed on the reverse, the number of shares of
Imperial Bancorp Common Stock held for my account in the Imperial Bancorp
Employee Stock Ownership Plan at the Annual Meeting of Shareholders of Imperial
Bancorp on May 21, 1998, and any adjournments thereof, as follows:
(Continued and to be signed on other side)
Please date, sign and mail your
direction card back as soon as possible!
Direction Card for Annual Meeting of Shareholders
IMPERIAL BANCORP
May 21, 1998
Please Detach and Mail in the Envelope Provided
[X] Please mark your votes |
as in this example. |
|_____
WITHHOLD
FOR AUTHORITY
all Nominees for all Nominees
1. ELECTION OF [_] [_]
DIRECTORS
To withhold authority to vote for any individual, write that Nominee's name on
the line below
- --------------------------------------------------------------------------------
Nominees: George L. Graziadio, Jr.
Bernard G. LeBeau
Norman P. Creighton
Richard K. Eamer
G. Louis Graziadio, III
Lee E. Mikles
Paul A. Novelly
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG Peat [_] [_] [_]
Marwick LLP as independent accountants
of the Company and its subsidiaries
for 1998.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS DIRECTION WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS DIRECTION
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
Signature(s) Dated , 1998
---------------------------------------- -------------
NOTE: Please mark, sign, date and mail this direction card promptly using the
enclosed envelope.
IMPERIAL BANCORP
1998 PROXY
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned appoints George L. Graziadio, Jr. and Norman P. Creighton as
proxies, each with the power to appoint his substitute, and authorizes them to
represent and to vote as designated on the reverse, all the shares of common
stock of Imperial Bancorp held of record by the undersigned on March 6, 1998, at
the Annual Meeting of Shareholders to be on May 21, 1998, or any adjournments
thereof.
(Continued and to be signed on other side)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
IMPERIAL BANCORP
May 21, 1998
Please Detach and Mail in the Envelope Provided
[X] Please mark your votes |
as in this example. |
|_____
WITHHOLD
FOR AUTHORITY
all Nominees for all Nominees
1. ELECTION OF [_] [_]
DIRECTORS
To withhold authority to vote for any individual, write that Nominee's name on
the line below
- --------------------------------------------------------------------------------
Nominees: George L. Graziadio, Jr.
Bernard G. LeBeau
Norman P. Creighton
Richard K. Eamer
G. Louis Graziadio, III
Lee E. Mikles
Paul A. Novelly
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG Peat [_] [_] [_]
Marwick LLP as independent accountants
of the Company and its subsidiaries
for 1998.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Signature(s) Dated , 1998
---------------------------------------- -------------
NOTE: Please mark, sign, date and mail this proxy card promptly using the
enclosed envelope.